They always sneak up on me — “they” means Berkshire weekends.
Invariably, I’m relaxing on the back deck, writing something I want to be writing or reading something I want to be reading, when I notice the Bloomberg headline dated a few hours previous. “Berkshire Hathaway Operating Income …”
This quarter, $7.01 billion was the number after the ellipsis. Net earnings were $11.7 billion (figure below).
The figures shown in the visual (which Warren Buffett encourages investors to ignore), are prone to large swings, with the most spectacular example being Q1 of 2020, when Omaha’s most famous granddad ran up a Nebraska-sized paper loss of almost $50 billion.
Buffett was criticized during the earliest days of the pandemic for… I don’t know, not promising to backstop the US financial system with Berkshire’s balance sheet. Instead, he parachuted out of America’s airlines and spent the rest of the year buying back his own shares. He did other things, but that was the gist of it.
The buybacks continued in Q1. Specifically, Berkshire spent around $6.6 billion buying back its own shares during the period, with the pace decelerating in March from January and February.
“We can’t buy companies or stocks as cheap as we can our own,” Buffett explained, on Saturday. That’s fair enough I suppose.
Berkshire’s cash stash rose to $145.4 billion, up more than 5% from Q4 (figure below).
The media flagged nearly $4 billion in net stock sales by Buffett and Charlie Munger in Q1. Munger said he’d rather hold Berkshire than the market.
For many (probably too many) market participants, Berkshire is synonymous with bellwether and barometer. If Buffett can’t find something to buy, then nothing must be worth buying, the story goes.
Folks were quick to parrot some version of that on Saturday. “If Buffett doesn’t perceive there to be acquisitions available at fair prices and it’s evident, as a net seller of stocks, that he doesn’t see a lot of opportunities in the open market to buy publicly traded stocks, are we looking at cash growing to $175 billion over the course of the next year or so?,” someone wondered, aloud, in an interview with Bloomberg.
I’ll answer that: Maybe. And who cares?
I’m steadfast in my contention that everyday investors are too enamored with Warren. It’s not that folks shouldn’t admire what he’s built, it’s just that the tendency for retail investors to believe they can “invest like Buffett” is woefully misguided. Put simply (and “put” is a kind of double entendre there), he runs a massive hedge fund built atop Berkshire’s float. I’d roll out the old “don’t try this at home” quip, but it’s meaningless here because you can’t — try that at home, I mean.
Other highlights from Berkshire’s annual shareholder meeting included Buffett deriding SPACs and claiming he and Munger have “never had an argument in 62 years.”
But the best part was undoubtedly 97-year-old Charlie delivering what might fairly be described as one of the most scathing assessments of Bitcoin anyone’s ever heard. I’ll just present that (below) without further comment.
Of course I hate the bitcoin success. I don’t welcome a currency that’s so useful to kidnappers and extortionists and so forth, nor do I like just shuffling out of your extra billions of billions of dollars to somebody who just invented a new financial product out of thin air. I think I should say modestly that the whole damn development is disgusting and contrary to the interests of civilization. It’s really kind of an artificial substitute for gold. And since I never buy any gold, I never buy any bitcoin. Bitcoin reminds me of what Oscar Wilde said about fox hunting. He said it was the pursuit of the uneatable by the unspeakable.